Posted on 09/29/2008 5:10:12 PM PDT by Swing_Thought
The current mess would never have occurred in the absence of ill-conceived federal policies. The federal government chartered Fannie Mae in 1938 and Freddie Mac in 1970; these two mortgage lending institutions are at the center of the crisis. The government implicitly promised these institutions that it would make good on their debts, so Fannie and Freddie took on huge amounts of excessive risk.
...snip...
Further, the current credit freeze is likely due to Wall Street's hope of a bailout; bankers will not sell their lousy assets for 20 cents on the dollar if the government might pay 30, 50, or 80 cents.
...snip...
So what should the government do? Eliminate those policies that generated the current mess. This means, at a general level, abandoning the goal of home ownership independent of ability to pay. This means, in particular, getting rid of Fannie Mae and Freddie Mac, along with policies like the Community Reinvestment Act that pressure banks into subprime lending.
(Excerpt) Read more at cnn.com ...
The guy is absolutely right.
As long as the Dims have control of congress this will never happen.
To have any chance the Republicans would need 60 votes in the Senate.
The Dims fight tooth and nail for every socialist program.
We all know how poorly the Republicans fight to eliminate them it is sad to say.
Dont bother to mention the lowering of lending practices in 1999 under Clinton or the attempt by the GOP in the banking committee for oversight when Maxine Waters and Barney Frank said everything was A-OK with Fast Freddy.
From Miron’s lips to my ears. Send this to every tax-payer you know.
VERY COMPELLING argument. Thank you for sharing this article.
CNN?
I know of a bank that sold off its sub-prime paper early on (for about 25 cents on the dollar). It took a major hit, but it acted responsibly to try to fix its own problem. It didn’t go to the government for a bailout.
I also know many, many people who pay their mortgages reliably. They saved their money and didn’t buy more than they could afford.
I know many people who use credit responsibly, pay off the balances each month, or keep it to a minimum.
I even know many college students who are working their way through school without student loans. They work part time jobs, share expenses, and do whatever else is necessary to avoid building up debt.
Now why in the world should these responsible people be forced to subsidize the irresponsible? Answer: they shouldn’t.
Bankrupt American - an awful lot of economical crap for many years.
Bankrupt Congress - pass a crap sandwich (and make American taxpayers pay for it.)
[Miron. Making sense. ]
Yup. The one thing I’d add is that the Fed should stop printing money, purposely devaluing the dollar. A good part of the excessive lending depended on low interest manufactured money. There are multiple causes for the crash, most of which are anti free market and anti hard money.
As usual, look in the last two paragraphs to find the evidence of culpability for the Dems....without mentioning them, I might add.
Miron is an ignorant boob who did not do his research.
in 2005 the federal gov restructured bankruptcy law to eliminiate lien stripping.
This accelerated the bundling of mortgages.
The home owner was suddenly prevented from lienstripping of the unsecured portion of the loan.
lenders no longer riskeed the decrease in collateral if a valuation was a fraud promoted by the lender.
I just emailed my senators that any solution which does not eliminate the racist Community Reinvestment Act is doomed to fail. My representative (Lloyd Doggett) is hopeless, but I will email him anyway.
You can’t expect the government to buy bad paper with one hand, and continue to force banks to give bad mortgage loans to undeserving minority members with the other hand.
Why don’t the Republicand stand up for what is right?
-snip-
Further, the current credit freeze is likely due to Wall Street's hope of a bailout; bankers will not sell their lousy assets for 20 cents on the dollar if the government might pay 30, 50, or 80 cents.
The author has a problem. He admits the government made a promise to make good on debts yet, he argues against the government making good on it's commitment.
No it didn't. Even if it did, only a fool would rely on an "implicit" promise when dealing with millions and billions of dollars. Wall street isn't that stupid. They new exactly what they were doing with the FM's. Everything was fine until it became impossible to defraud them any more.
Clarity.
Go to work.
Pay your bills.
Have a beer.
You’ll be fine.
America.
I wondered if anybody else noticed that the CNN money people have been amazingly ANTI-bailout all weekend! Lou Dobbs was practically frothing at the mouth... will wonders never cease....
" So what should the government do? Eliminate those policies that generated the current mess. This means, at a general level, abandoning the goal of home ownership independent of ability to pay. This means, in particular, getting rid of Fannie Mae and Freddie Mac, along with policies like the Community Reinvestment Act that pressure banks into subprime lending.
The right view of the financial mess is that an enormous fraction of subprime lending should never have occurred in the first place. Someone has to pay for that. That someone should not be, and does not need to be, the U.S. taxpayer."
Once housing prices declined and economic conditions worsened, defaults and delinquencies soared, leaving the industry holding large amounts of severely depreciated mortgage assets.
The only point he made that I would quibble with just a little is leaving this idea out there that housing prices magically declined, somehow in a vacuum. (That may not have been Mirren's point, and I realize he can't go into every tangent in this extremely well-crafted and tight piece, but it is a hanging inference.)
Housing prices declined BECAUSE of the subprime lending mess. Cheap and crazy money made the entire housing and real estate industry go wild, which led to unsustainable price increases and massive overruns in inventory. When the foreclosures began to be added to that picture, the camel's back broke.
I’m certainly starting to have more confidence that he is.
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